Grafton revenues rise in first half of 2013

Revenues at builders merchants Grafton Group rose by 1 per cent to more than €1 billion in the first half of the year as the company continued to make progress in the market.

Underlying trading profits for the six-month period were 17 per cent higher at €36.6 million, beating analyst forecasts. Pretax profit was up 27.5 per cent to €28.7 million.

A non-recurring pension scheme credit boosted actual operating profit, which rose by 179 per cent to €68.4 million.

The company announced an interim dividend of 3.5c per share.

The company said it had seen more positive revenue trends in its UK merchanting business, while the Irish division had stabilised and profitability had improved. Grafton’s retailing business was profitable in the first half, following a restructuring operation in 2012.

"The group continues to make good progress following several years of challenging market conditions and the measures we have undertaken to reduce overheads, strengthen gross margins and improve profitability have provided the business with a strong platform from which to build," chief executive Gavin Slark said. "There are tangible signs of stability returning in our core markets with the recovery in the UK housing market providing a positive backdrop for the group, although we feel it is prudent to assume that any recovery will be gradual and will involve its own challenges. However, regardless of the wider market conditions, we remain focused on driving further internal improvements in our existing businesses in order to maximise shareholder returns".

In a note this morning, Davy Stockbrokers said the results were further confirmation that the group’s return to health was continuing.

“Stand-outs from the results include further margin improvement in the UK and a much improved operating result in Ireland,” Flor O’Donoghue wrote. “Moreover, outlook comments point to an acceleration in revenue growth since the beginning of July.”